The greater good: capital and connections to accelerate the Climate and CleanTech sector

At BNZ, we have had a consistent value proposition centred around supporting tech businesses at all stages of their lifecycle through our expertise, connections, and capital. As the technology sector has ballooned into the fastest growing sector of our economy, and technology is increasingly being adopted in all industries, so too has the need for specialist knowledge and expertise among the unique sectors within the technology industry.

A large part of our continued investment comes in the form of our subsector leaders (see also Watch these spaces, BNZ triples down on tech sector) and with that, I’m delighted to introduce Charlie Mear, my colleague of the past six years who has stepped from supporting the growth of our overall tech clients and proposition to lead our focus on Climate and CleanTech.

Climate and clean technologies are key to New Zealand and the world in addressing climate change. They support more effective, and often less, utilisation of earth’s natural resources.

While many of the climate-oriented standards and regulations have been, or are being, developed offshore (which could change going forward), New Zealand has a genuine opportunity to take a lead in creating climate and clean technology solutions. We have a strong pool of talent and expertise in our growing technology sector, and a unique proximity with an open-door culture between the private and public sectors that allows us to connect and test on a small scale here, and then scale up offshore. We think banks have a big role to play in supporting the growth of this unique sector.

What do tech businesses striving for climate and clean solutions need? From our vantage point, in working closely with the sector and key stakeholders over the past eight years, we see real value in focussing on capital alternatives and connections.

Capital

There’s no doubt access to capital is a challenge for the Climate and CleanTech sector. There’s an overall lack of capital available because the returns are typically longer term, start-up costs are intensive, and as an emerging sector it faces unique technical, regulatory, and adoption challenges. This means that equity capital, alone, may be harder to find.

We think more progressive non-dilutive capital (i.e., capital that does not require giving up a portion of a business’ shares or ownership), both from public sector and banks, is a key part of the puzzle. Non-dilutive capital, such as grants or loans, allow founders and investors to maintain greater ownership of a climate and clean tech business’ intellectual property and future increases in value (and perhaps keeping it in New Zealand longer too). Non-dilutive capital can help make the economics of equity capital investment work.

We are always looking for ways to provide non-dilutive debt capital earlier, particularly in climate and clean tech businesses and we are always open to ideas on this front.

So far, we have three new options; Revenue Based Financing, Project Scale Up, and Contracted Receivables Financing available to relevant climate and clean tech businesses in New Zealand. This is alongside a raft of existing finance options and a strong desire to play our part in our climate and clean tech sector. There is increasingly public sector funding available too, and we are quick to point out where to look.

Connections

Five years on from the 2018 announcement of $100 million Green Investment Fund to support the development of low-carbon technologies and projects, the emphasis on technology for climate solutions within Government has only been building. Renewable energy technologies, such as wind, solar, geothermal, and battery storage, are targeted to generate 100% of electricity from 2030. And regardless of which party leads following the election, it’s clear from all parties that there’s ongoing commitment to this, and it’s essential that the private sector remains close to government to deliver on that.

While we all know it’s important, we are not yet good at tracking and sharing the specifics of growth within the sector, although there are some promising numbers emerging; Phil Anderson, Callaghan Innovation’s Clean Tech Businesses Innovation Advisor recently wrote an op-ed for NBR in which he says, “Callaghan worked with almost 300 CleanTech start-ups during the 2020 financial year. In that same period, 98 of those clean-tech innovators alone generated $330m in revenue, supported 1,860 jobs and invested $95m in R&D.”

There’s no shortage of enthusiasm for the sector from all stakeholders, what we need to get better at is capturing and sharing the key data points that help us all to forge a stronger, more connected sector.

Our intention in creating these new leadership positions is to spread and embed sector knowledge both internally, and in the market, to grow connections and to get capital solutions to businesses fast and early. So, keep an eye out for Charlie in her new Head of Climate and CleanTech role.

The greater good

At the end of the day, the sector is looking good, but we all know it could be great. There are plenty of interested and invested stakeholders in this space, and if we can collaborate to track the growth of the sector, we’ll be able to build the connective tissue we need to find and remove obstacles for Climate and CleanTech businesses to thrive. And if we can fast-track more companies with the right capital solutions, we’ll accelerate our way into the kind of outcomes everyone will celebrate; environmental wellbeing, thriving sustainable businesses, a high-value export industry and new employment opportunities.

Any views expressed in this article are the personal views of Timothy Wixon and do not necessarily represent the views of BNZ, or its related entities. This article is solely for information purposes and is not intended to be financial advice. If you need help, please contact BNZ or your financial adviser. Neither BNZ nor any person involved in this article accepts any liability for any direct or indirect loss or damage arising out of the use of, or reliance on, all or any part of the content. This article is solely for information purposes. It’s not financial or other professional advice. For help, please contact BNZ or your professional adviser. No party, including BNZ, is liable for direct or indirect loss or damage resulting from the content of this article. Any opinions in this article are not necessarily shared by BNZ or anyone else.